Viacom CEO Expects Online Pay TV Operator Launch in 2014

UPDATED: Philippe Dauman also talks about Nickelodeon and MTV, says the Paramount Channel will launch in more international markets next year and touts Paramount's first-look deal with Jerry Bruckheimer.

NEW YORK – Viacom CEO Philippe Dauman discussed the performance of his firm's studio and networks at an investor conference here Monday, touting their outlook. And he drew some gasps when he predicted that 2014 could see the launch of a virtual pay TV operator, something that has long been discussed as a possibility.

But the Viacom boss didn't share specifics or name names.

Intel, Sony, Apple and other tech firms are believed to have looked at launching such a broadband-based pay TV service. Analysts have also said that once a virtual player launches, traditional pay TV firms could look at offering over-the-top TV packages to reach beyond their traditional geographic boundaries and provide national services.

The Wall Street Journalreported this summer that Sony had reached a preliminary agreement to carry Viacom‘s networks on its possible digital pay TV service.

In a lunch time keynote appearance at the 41st Annual Global Media and Communications Conference, organized by UBS, Dauman also said the company plans to return "a lot of money to our shareholders," while it would also continue to invest in growth opportunities, such as animation content at Nickelodeon and Paramount Pictures.

Asked about his appetite for acquisitions, he said the company's debt leverage puts it in a comfortable position. "Targeted acquisitions, largely internationally" continue to be in his focus, he said, adding he expects most deals to be worth $200 million or less.

He reiterated that his team expects mid-single digit advertising revenue growth in the current quarter. He also predicted that Nielsen and others would make progress over the next year in terms of improving measurement of viewers on new devices.

"Nickelodeon has emerged in a much stronger place," Dauman said when asked about the 10 consecutive months of increased ratings since a slump at the network. He said investments in both animated and live-action fare, including the updated Teenage Mutant Ninja Turtles, together with a viewing app have helped the network.

"I feel very good and strong" about Nickelodeon's future, he said, pointing to how the network has again overtaken the Disney Channel in the kids 2-11 demographic ratings of late. He predicted the ratings lead would likely go back-and-forth over the near-term. Animated shows have good longevity and allow consumer products tie-ins, he said.

Discussing MTV, Dauman said 2014 will see more scripted show launches to build on the success of Teen Wolf and Awkward.

Asked about Paramount's decision earlier this year to put a "toe in the water" of the TV production sector, he said the company is developing ideas based on its library and new concepts for cable and broadcast networks. He said shows could go to Viacom's own and other companies' networks. He reiterated that the initiative required little investment and risk.

When Viacom and CBS split in 2005, CBS got to keep the TV production business and the library of Paramount.

Asked about international trends, Dauman said Nickelodeon Germany is doing very well. The U.K. has remained stable, while recent deals to fully take over joint ventures in such markets as Russia provides new upside opportunities. In India, he said Viacom will continue to look for growth, while China isn't really open for many foreign companies.

Dauman had recently lauded a "stabilization we are seeing in the European economy," which will allow the company's European networks to return to sustained growth. Continental Europe had a difficult year for Viacom's TV networks unit, but things are looking up now, he had said last month.

Dauman on Tuesday also said more European countries would launch the Paramount Channel next year, with Latin America and Asia also providing opportunities.

Asked about carriage renewal talks with pay TV operators, Dauman said Viacom provides much value because its ratings and related revenues are higher than its carriage fees. He said he continues to expect at least high single growth in carriage fee revenue going forward. "I think there is a very strong change of that," he said when asked if a virtual pay TV operator could launch next year,

Dauman at the UBS conference once again touted Paramount's outlook, saying: "We have a wealth of franchises," including new ones, such as World War Z, which is getting a sequel as the studio previously announced.

Dauman on Monday also touted a first-look deal with Jerry Bruckheimer, highlighting that it would lead to another Beverly Hills Cop film, as well as Top Gun 2.

Asked how he feels about the film business, he also said "we never want to wake up with a big loss" on a single film, and Paramount's strategy ensures that.

"This was an unusually crowded tentpole summer" that was very competitive, he had recently said, adding that a Star Trek sequel and World War Z "did quite well" in that context.